That's got to have the people at Seattle-based virtualization startup illumita, which pulled down $6 million in funding last week, feeling pretty good. (Did we mention they're hiring? They are.) Their investors are probably smiling broadly, too, especially the guys over at Bellevue-based Ignition Partners.

Earlier this year, Microsoft, Google, Dell, Hewlett-Packard, Intel and Philips -- working together as the White Space Coalition -- built a demonstration device to lobby the government to open up unused television airwaves -- called white space -- for wireless Internet access. The effort got the backing of Rep. Jay Inslee, for one.

But the Federal Communication Commission's initial review of the device was negative.

"This report determined that the sample prototype white-space devices submitted to the commission for initial evaluation do not consistently sense or detect TV broadcast or wireless microphone signals," the commission said, striking a blow to the hopes of companies looking to use the spectrum for portable devices like PDAs and game controllers.

The prototype was meant to demonstrate that accessing unused TV spectrum would not interfere with existing technology, such as TV broadcasts on adjacent channels and wireless signals.

The FCC review pleased the National Association of Broadcasters, which worries that using the white space would disrupt their signals.

The FCC's latest tests "confirm what NAB and others have long contended, that the portable, unlicensed devices proposed by high-tech firms can't make the transition from theory to actuality without compromising interference-free television reception," said NAB executive vice president Dennis Wharton in a prepared statement.

Microvision stock got a lift today after the company announced a deal with Motorola to integrate its miniature projector into Motorola handsets. Microvision's PicoP projector has been a key product to test whether the company can successfully commercialize its technology and ensure its own survival.

The tiny laser projector works inside mobile devices to project content from the screen onto a larger surface, enabling big screen viewing of movies, videos and the like.

The companies announced a joint development agreement to integrate PicoP into a Motorola handset "for demonstration purposes." That sounded pretty tentative to me, so I asked Microvision spokesman Matt Nichols to clarify what the agreement means.

Until now, prototypes of the PicoP were not designed within functioning handsets, he said. This agreement takes it further by putting it into a real Motorola mobile device, validating the potential of Microvision's technology. As to what's ahead, "for competitive reasons" Motorola doesn't want to say what is beyond the initial test, he said.

However, Microvision is aiming to partner with a number of hardware makers to bring the projector to market, so it's no secret the company hopes its deal with the world's second largest handset maker will go a lot further than a demo.

Video game industry analysts I spoke with last week for today's story previewing the Electronic Entertainment Expo (E3) were fairly certain we would see a price cut from either Sony or Microsoft sometime before the holiday season.

"These guys have got to do something, or Nintendo is going to run away with this business," said Mike Goodman, director of digital entertainment with Yankee Group Consumer Research.

Last night, Sony confirmed those predictions, lopping $100 off the price of the PlayStation 3. It now retails for $499, still the most expensive of the current generation video game consoles.

Sony also rolled out an 80 gigabyte hard-drive version of the PS3. According to this Associated Press report, the higher-capacity model will be packaged with racing game "MotorStorm" and sell for $599. This model won't hit North American markets until August.

Karraker said further details on high-def movies for download would be released at a later date.

Could that later date be, say, Wednesday morning at 11:30 a.m., when Sony holds its E3 press conference? And what might this mean for Microsoft's Xbox 360?

The company isn't tipping its hand just yet. The president of Microsoft's Japan unit, Darren Huston, is quoted in this Wall Street Journal roundup as saying the Xbox 360 has "very competitive pricing" right now. He added that Microsoft would continue to "assess market dynamics." Not clear if his comments apply just to the Japanese market or to the Xbox 360 business globally.

I'll be keeping track of the major announcements from Santa Monica this week as E3 begins Tuesday. Check back here for updates following Microsoft's press conference Tuesday night at 8:30 p.m. Nintendo goes before the cameras Wednesday morning at 9, followed by Sony.

In other news going in to E3, Sony issued an apology for a shoot-out scene that takes place in an Anglican cathedral in "Resistance: Fall of Man." According to this AP report, the game depicts a "gun battle between an American soldier and aliens inside a building that resembles Manchester Cathedral in northwest England."

Here's another story updating Nintendo's efforts to make the DS Lite an integral part of baseball through a pilot project with the Mariners at Safeco Field.

MWR analyst Sid Parakh has been keeping an unofficial eye on the company for a while now and formally initiated coverage today with a "buy" rating and a $10 price target. The company's shares were down slightly today to $7.50.

Cray took a big hit in May when it disclosed the first of two negative developments that smacked the stock down. Parakh, in his opening report, put it this way:

Cray reported that it was experiencing product development delays for its BlackWidow (BW) and XMT products, pushing the launch timeline into late 2007 and 1H2008, respectively. In early June, the company announced a six-to-eight week delay in the launch of its XT4 Quad-Core product due to a postponement in the availability of a key component. The combination of these two events caused Cray to lower its 2007 outlook from its initial revenue expectation of $230 - $260 million down to under $200 million. Additionally, the company scrapped its earlier operating margin guidance of 3% - 7%, implying negative operating margin expectations.

Seattle-based supercomputer maker Cray announced that it's expecting revenue this year at or below $200 million.

"While there continues to be a wide range of potential outcomes ... consequently, there is an increased probability that the company will not achieve profitability for the year," company management wrote.

Cray shares were down more than 12 percent, 96 cents, to $6.99 in early afternoon trading on the Nasdaq.

It sounds like the current year revenue slide is more of a delay than a disappearance altogether. Cray attributes the downgrade to "timing of volume parts availability" for its quad-core Cray XT4 systems. The company expects to begin selling these systems in the fourth quarter, but "the timing is such that most or all of the planned acceptances, and associated revenue recognition, will likely be deferred until early 2008."

Peter Ungaro, Cray's CEO, said in a statement the company is disappointed that two of its top goals -- growth and profitability -- are now "in jeopardy for 2007."